Prison Investigating Francorp's CEO Boroian

But with strict policies in place, how can prison authorities be unaware of Boroian conducting weekly or even daily conference calls while he is serving out his sentence? Policy for federal inmates is clearly stated on the federal prison web site: 

"Inmates cannot conduct business in prison. An inmate is expected to assign authority for a business or profession to someone else. Occasionally, it may be necessary to make a decision that will substantially affect the assets or prospects of the business. In such cases, the Warden can allow a special visit."

At this time, Boroian is scheduled to be released from prison to a halfway house the first week of April, according to one source, and on June 9 he will be given supervised release for two years as a result of his goo d behavior. For inmate safety reasons, a prison official said they could not confirm his release to a halfway facility, but could confirm the projected release date.  According to a court document signed by his warden addressing imprisonment, Boroian surrendered on July 27, 2006 to the Duluth Federal Prison Camp with a certified copy of the judgment. That would make his release date approximately July 28, 2007.

New Challenges Ahead for Boroian  

What lies ahead for Boroian and his company when he takes over the helm? Although Francorp has been riddled with numerous federal and state tax liens totaling approximately $2.9 million over the past ten years, it appears some $1.1 million have been "released" or paid, according to the Illinois Cook County of Deeds, leaving approximately $1.8 million as outstanding.

In reviewing one Francorp Federal Tax Lien listed with Cook County, the company owes $706,126 on back taxes for years 2003 to 2006, which is all listed as 941 employment taxes.  Tax attorney Alan F. Segal in Chicago explains that this lien only reflects the liability through December 2005, and it looks like Francorp had paid everything it owed through the fourth quarter of 2004.  The amounts shown are probably the accrued penalties and interest.   He said the 2005 amounts are more significant and look like they were also paid on time, with the company's matching portion. But by now four more quarters have accrued and he said, "For all we know a lien coul d be filed two weeks from now, reflecting liability for 2006."

Segal also explained that in order to work out a payment schedule for its employment taxes a company has to be paid up on at least two or three current quarters. If a company doesn't stay current, the IRS can issue a final notice, stating you have 30 days to file for a due process hearing, to explain why you haven't paid and to work something out. He said, "If you don't file, they can start taking forcible collection action. That means they can go to Francorp's bank accounts and help themselves to whatever is there."

Also, if Francorp gets any kind of fees from clients and the IRS finds out about it, it can file a Notice of Levy to clients, telling them their payments must be paid to the IRS instead of to Francorp. Another problem coul d be for company employees who are considered as responsible officers, those who have power to make company decisions. He said, "The IRS can propose the Trust Fund Recovery Penalty against the responsible officer, which means if an employee makes decisions to pay other companies or people instead of depositing monies into the trust fund, the IRS can go after that person.

Segal said that the IRS will most likely be filing a lien against Boroian at a future date because after the criminal case the IRS will then go after him in a civil action suit. Since he had a plea of guilty he is more than likely on a payment schedule for personal income taxes, which would not be public information. He said, "That is between him and the IRS."  But Segal said the plea agreement will state his requirements with making good on the monies that he owes.

The actual plea agreement addresses that Boroian failed to pay a total of $542,000 in taxes during a four-year period, 1997 through 2000. And since his compliance extends throughout an d beyond the period of his sentence, failure to abide by any term of the Agreement will be considered a violation.  If a violation does occur, the Government may vacate the plea agreement and prosecute Boroian.  As to the Schedule of Payments, they will be applied in this order:  1) assessment, 2) restitution principal, 3) restitution interest, 4) fine principal, 5) community restitution, 6) fine interest, 7) penalties, 8) costs, including cost of prosecution and court cost.

Francorp's Future Could Be Bleak

Now with a fresh prison record for tax evasion attached to his credentials, and with the challenge of juggling old and new tax liabilities and financial obligations, one source thinks that Boroian will have a hard time keeping his Francorp business afloat.   Last week, according to the source, another member of its key management team jumped ship and it is rumored that others are looking to do the same. With all that and new rumblings from clients who are less than satisfied with the services they are receiving, what chance will Francorp have? Again, from the source, "Only time will tell."